Mishra Dhatu Nigam Q1 Results Review - Unfavorable Risk-Reward: ICICI Securities

ICICI Securities Report

Mishra Dhatu Nigam Ltd. Q1 FY25 performance was underwhelming with revenue and Ebitda declining 13% YoY and 44% YoY respectively. Key points:

1. Ebitda margin declined YoY to 14.3% (22.1% in Q1 FY24), led by change in product mix.

2. Implied order inflow in Q1 FY25 was Rs 3.4 billion.

3. Orderbook as of June 2024 end stood at Rs 17.6 billion, implying book/bill (ttm) at 1.6 times.

4. Tax rate for Q1 FY25 was 43% (in FY24: ~30.3% of profit before tax).

The management in its last concall, has guided for

1. revenue growth of 20-25%,

2. improvement in Ebitda margin and

3. order inflow of Rs 11.5 billion (in its previous interactions with investors).

Despite factoring in revenue growth and improved Ebitda margin, we see unfavorable risk reward at this price.

We maintain 'Sell' with an unchanged target price of Rs 360/share based on 20 times FY26E Ebitda.

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